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Home Publications Blogs Beat the Press Tax Breaks Are Heavily Tilted Toward High Income Taxpayers

Tax Breaks Are Heavily Tilted Toward High Income Taxpayers

Sunday, 18 September 2011 14:34

The Post had a front page column reporting on the cost of tax breaks. The piece likely gave many readers a misleading picture of the main beneficiaries of these tax cuts when it told readers that:

"the bulk went to private households, primarily upper-middle-class families that Obama has vowed to protect from new taxes.'The big money is in the middle-class subsidies,' said Syracuse University economist Leonard Burman, former director of the nonpartisan Tax Policy Center."

In fact, by far the largest beneficiaries of these tax cuts are upper income individuals as the chart accompanying the piece shows. For example, tax breaks amount to average of $82,400 for families with income between $500,000 and $1,000,000. Close to 70 percent of the mortgage interest deduction goes to families with incomes above $100,000 a year.

These tax breaks tend to be worth less to more moderate income families since in most cases they do not amount to much more than the standard deduction. That means that most families near the median income (@$60,000) see little benefit from these tax breaks.

Comments (5)Add Comment
True But COL?
written by James, September 18, 2011 6:17

Yes, much of tax breaks go to high-income tax brackets. But you use the example of $100K, that amount is really NOT high-income let alone rich if you put that income in high-cost cities like on both coasts, i.e., CA and NY.

For example, the median house price in L.A. or NY is still high even if you make a $100K annually.
Only One Tax is Free of Subsidies
written by izzatzo, September 18, 2011 9:16
'The big money is in the middle-class subsidies...

Exactly. Any economist knows the only true tax free of subsidies is the One Time Lump Sum Per Person Flat Tax assessed at birth which cannot influence economic decisions going forward and therefore creates no distortion of efficient equilibrium.

It also encourages the middle class to have less offspring which increases per capita income by creating labor shortages.

Stupid liberals.
written by lou firpin, September 19, 2011 12:55
The WaPo article compares tax expenditures, but it doesn't discuss tax rates. A discussion of tax rates on corporations and the super rich would seem to be essential to understanding the real problem.
written by MarkJ, September 19, 2011 8:32
With 100 million individuals in the labor force earning a wage less than $25,000 annually how could the income for a family of $100,000 not be seen as "high income" no matter where they lived?
written by Joe Guggenheim, September 19, 2011 2:58
Granted that upper income households received distorted benefits from the Bush tax cuts, but the bulk of the lost revenue came from middle class families simply because of their total numbers in the overall population. Ending all or some of the Bush era tax cuts for families with incomes of $100,000 or more beginning in 2014 - coupled with tax credits for college expenditures - would go a long way toward meeting the need for deficit reduction.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.